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Homebuyers with tighter budgets already faced steep barriers to entry in the housing market, but the ongoing inventory crunch has made it even tougher for disadvantaged buyers to become homeowners.
Executives from two startup real-estate firms — Cyril Berdugo of Landis Technologies and Charles Myslinsky of OJO Labs — discussed how tech companies can overcome these hurdles, reach disadvantaged homebuyers and make money in the process in a conversation at Inman Connect Las Vegas.
“There are too few companies that actually want to help 100 percent of clients,” said Berdugo, who co-founded Landis with business partner Tom Petit. “A lot of people that are below a certain purchase price are marginalized and disenfranchised.”
The fundamental problem often lies with the incentive structure, Berdugo said. When companies charge a fee as a percentage of the transaction, it discourages those services from working with buyers in lower price points, he said.
There are also incentives against working with buyers who have a harder time securing conventional financing, or even FHA or VA loans, said Myslinsky, OJO’s chief product officer.
These buyers already found it difficult enough to navigate previous real-estate environments. In this highly competitive seller’s environment, many are being forced out entirely.
“A lot of relationships in our industry begin with a score,” Myslinsky said. “It’s a very odd way to think about the way that we operate, relative to the empathy that people otherwise might expect.”
Addressing these problems isn’t a simple proposition. But agents can be part of the solution, especially when they’re already working with buyers in lower price points, Myslinsky said.
“It’s thinking about each [agent’s] role as that adviser, and then actively seeking out companies that represent those values as well,” Myslinsky said.
Increasingly, tech companies are finding that they need to enlist the help of agents for their services to get adopted, Myslinsky said.
Some tech companies, billed initially as replacements for agents, end up bringing agents into the fold in the long run. In many cases, tech companies are better off embracing agents as “tech-enabled experts,” Myslinsky said.
OJO blends artificial intelligence with human employees to help buyers — especially first-timers — explore listings, answer questions and plan for the financial side of homebuying.
Berdugo’s company forged a new path to homeownership altogether for families that may not have the means to qualify for a loan right away.
In the Landis business model, a family chooses a home, then the company buys it and rents it back out to the family. Rent that the family pays toward Landis goes toward a down payment fund, which they can use to eventually buy the home outright from the company.
Homebuyers with credit scores as low as the 500-580 range have seen a high rate of success eventually becoming homeowners using these services, Berdugo said.
Reaching disadvantaged buyers requires rethinking the incentives the industry adopts with regard to less privileged buyers, Berdugo said.
“We’re transactional in real estate. It sucks,” Berdugo said. “But we need to have compassion — real compassion.”